Genmab A/S (GMAB) 2022 Q4 法說會逐字稿

Hello, and welcome to the Genmab Full Year 2022 Conference Call. As a reminder, this conference call is being recorded. During this telephone conference, you may be presented with forward-looking statements that include words such as believes, anticipates, plans or expects. Actual results may differ materially, for example, as a result of delays or unsuccessful development projects. Genmab is not under any obligation to update statements regarding the future nor to confirm such statements in relation to actual results unless this is required by law.

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I would now like to hand the conference over to your first speaker today, Jan van de Winkel. Please go ahead.

Hello, and welcome to Genmab's conference call to discuss the company's financial results for the period ending December 31, 2022. With me today to present these results is our CFO, Anthony Pagano. For the Q&A, we will be joined by our Chief Development Officer, Judith Klimovsky; our Chief Operating Officer, Anthony Mancini; and our Chief Medical Officer, Tahi Ahmadi.

Let's move to Slide 2. As already said, we will be making forward-looking statements so please keep that in mind as we go through this call.

Let's move to Slide 3. Genmab has a science-anchored and innovation-based culture and collaborations and partnerships have always been part of our DNA. During today's presentation, we will reference products being developed under these strategic collaborations and this slide acknowledges those relationships.

Let's move to Slide 4. Genmab has had transformative growth in all areas of our organization as we transitioned into an integrated biotech that brings our own medicines to patients. Certain fundamental aspects of our business, however, will remain unchanged. And these include innovative sciences at our core, and we strive to be forward thinking in all areas of our business. And we have an unstoppable team that aspires to use our innovations in antibody therapeutics to fundamentally transform the lives of patients. These foundational pillars led to great progress last year, setting us on the path that inspired our 2030 vision, which we unveiled in 2022.

Let's turn now to recent accomplishments that will support our future success, Slide 5. 2022 marks the 10th year of profitability for Genmab. As Anthony will describe in detail, this success is due to both our growing recurring revenue streams and/or investing this revenue into -- in a focused and disciplined manner. Throughout the past year, we continue to invest in the strategic growth of our team and the maturation and the expansion of our differentiated innovative product pipeline.

In September of last year, we, together with our partner, Seagen, celebrated the first full year of TIVDAK being available for cervical cancer patients in the U.S. At the beginning of this year, the NCCN updated their cervical cancer treatment guidelines, upgrading TIVDAK to a preferred regimen for second line or subsequent therapy in recurrent or metastatic cervical cancer. This upgrade is important for patients who are entering their second line of therapy and applies regardless of the biomarker status. For this patient population, TIVDAK the only non-IO preferred treatment regimen across the second-line setting for all comers regardless of PD-L1 status. Based on this -- on the high unmet need and the strong efficacy results we have seen in clinical trials, supported by the NCCN updates, we believe that TIVDAK is on the way to becoming the clear second-line choice for women with recurrent or metastatic cervical cancer.

Turning to our next potential medicine. 2022 was a critical year in the development of epcoritamab. We have spoken both following our Q3 results last year and our 2022 ASH Investor Event about the BLA and MAA submissions by Genmab and our partner, AbbVie, respectively. We are pleased to add to this our submission of a Japan NDA at the end of December for epcoritamab for the treatment of patients that relapsed or refractory LBCL after 2 or more lines of systemic therapy. With these regulatory submissions, we are one step closer to potentially delivering epcoritamab as a new therapeutic option for people living with certain hematologic malignancies in the U.S., Europe and Japan. Together with our partner, AbbVie, we believe that epcoritamab has the potential to become a core therapy for patients around the world with B-cell malignancies, and we are committed to progressing a comprehensive development program evaluating epcoritamab across a broad range of B-cell lymphomas. And we look forward to receiving feedback from the U.S. FDA by the PDUFA date of May 21.

The past year was also notable for data presentations and publications. These highlighted investigational medicines across our portfolio including a December article in the Journal of Clinical Oncology on the Phase I/II epcoritamab dose expansion data. We expanded our pipeline in 2022 with new investigational medicines entering the clinic. One of these, HexaBody-CD27, is part of an expansion of our thriving collaboration with BioNTech. I would also like to mention that as you can now see on ClinicalTrials.gov, there is a new arm in the Phase I/II trial of HexaBody-CD38, comparing it to subcutaneous daratumumab. This will be a head-to-head evaluation to determine that a HexaBody-CD38 may be more potent in CD38 antibody-naive patients with relapsed or refractory multiple myeloma. We very much look forward to seeing how this trial progresses.

So now let's now move to the next slide and a brief reminder of the impact of our innovation beyond our own pipeline. Slide 6. Partner-owned programs powered by our world-class innovation and especially our proprietary DuoBody platform also saw great progress in 2022. Novo Nordisk's Mim8 end of Phase IIIa development and for both teclistamab and talquetamab, Janssen posted multiple new Phase III trials on ClinicalTrials.gov, including in combination with daratumumab.

In 2022, Janssen's TECVAYLI became the second DuoBody-based medicine to receive regulatory approval. With our submission of a BLA for talquetamab in December as well as a submission in Europe in January of this year, there is the potential for (inaudible) approved medicine from our DuoBody agreement with Janssen. If both epcoritamab and talquetamab are approved in 2023, there will be 8 approved medicines that incorporate Genmab's innovation available for patients, half of which will be powered by our DuoBody technology platform.

I also want to briefly mention some exciting recent news. Last week, the British Pharmacological Society announced that the team behind the development of amivantamab has been awarded its prestigious Drug Discovery of the Year 2023. The creation of amivantamab was a team effort with the 2 antibody libraries used to produce amivantamab generated by Genmab, hence, the antibody pair used to create amivantamab selected in collaboration with Janssen R&D, which subsequently led a preclinical and clinical development by Janssen. This award is further validation of the potential of Genmab's innovative DuoBody technology platform to create truly differentiated bispecific antibody therapeutics.

Now turning to DARZALEX. It continues to redefine the treatment of multiple myeloma. And as you have seen, J&J's net sales for daratumumab are up 32% over 2021. And that is generating more than DKK 10 billion in royalty for us, contributing materially to our robust financials. I would also like to note that the sales of Kesimpta passed the $1 billion mark in 2022. Kesimpta is now the 3rd blockbuster medicine on the market created by Genmab.

I will now turn the call over to Anthony Pagano to take you through our 2022 financial results. Anthony, the floor is yours.

Great. Thanks, Jan. Let's move to Slide 7. We continue to strengthen our foundation during 2022. To start, as Jan just mentioned, together with our partner, AbbVie, we've achieved our goal of regulatory submissions for epco in the U.S., Europe and Japan. And as we'll see, our financials for the year are exceptionally strong. We grew operating profit by 111%. We also increased recurring revenues by 70%. This was principally driven by strong royalties from DARZALEX and other approved medicines. But note that favorable FX also had a significant impact here, and I'm going to return to this in just a bit. Our strong balance sheet, growing recurring revenues and significant underlying profitability allow us to continue to invest in our business and our pipeline at a very focused and disciplined way. As an important part of this has been to continue to build the team and capabilities that we need to succeed.

So let's take a look at those revenues in just a bit more detail on the next slide. We saw robust performance for DARZALEX in 2022. As you can see in the chart, overall, net sales grew by 32%. That's net sales of nearly $8 billion, which translates to over DKK 10 billion in royalty revenue. This exceptional growth was driven by continued strong market shares, including further uptake of the subcu formulation. And as a reminder, for our royalties, we also had a significant FX tailwind.

So DARZALEX remains a key driver of our revenue, as you can see on Slide 9. We grew total revenue to around DKK 14.6 billion in 2022. And as I've already highlighted, that included a 70% increase in our recurring revenue. We've already spoken about DARZALEX and the very strong performance there. Turning to Kesimpta and TEPEZZA, we saw an increase of DKK 747 million in royalties compared to last year. And impressively, Kesimpta achieved blockbuster status in 2022. Taken together, this growth really illustrates the power of our recurring revenue. Finally, we've seen some pretty significant FX tailwinds, particularly for our royalty revenue related to the strength of the dollar and the contractual hedge rate for DARZALEX.

Let me break that out in a bit more detail on the next slide. In aggregate, of the 70% year-over-year growth in recurring revenue, 30 percentage points were related to FX tailwinds. And I'll make a few points here. First, as we all know, FX can move in both directions. So 1 year's tailwind can, of course, become next year's headwind. And second, with our 2022 figures enhanced by FX, we set up a tough comp for 2023. That said, what's super encouraging for me is the 40% underlying operational growth. So in 2022, we've materially strengthened our revenue profile.

Now let's take a look at how we're using our strong recurring revenue to continue investing in a highly focused way. As you'd expect, given the investments we're making, total OpEx grew 51% for the year. In R&D, we've accelerated our investment into our product portfolio, especially the advancement of epco and other pipeline projects. We've also further strengthened our team to enhance our commercial capabilities and support our expanding pipeline. That includes TIVDAK and the filings and potential launch for epco.

Now let's take a look at our financials as a whole on Slide 12. Here, you can see our summary P&L for 2022. Revenue came in at around DKK 14.6 billion. That's up 72% on last year, favorably impacted by a significant FX tailwind, as mentioned previously. Total expenses were about DKK 8.2 billion with 68% being R&D and 32% SG&A. And that brings us to our very strong operating profit of over DKK 6 billion, and that's an increase of 111% compared to 2021.

Moving now to our net financial items. Here, we have income of nearly DKK 700 million, which is primarily driven by the same 2 partially offsetting items that we've highlighted recently. First, we've got the strengthening of the U.S. dollar against the Danish kroner positively impacting the value of our cash and investments. On the other side of the ledger, we have losses on our marketable securities due to rising interest rates and some losses on our public equity investments. And finally, there was an increase in interest income due to higher effective interest rates. Then we have tax expense of around DKK 1.5 billion, which equates to an effective tax rate of 21.5%. It's important to note that this rate is positively impacted by some onetime items in 2022 so it isn't reflective of what we would expect moving forward. And that brings us to our net profit of over DKK 5.5 billion. So as you can see, extremely strong financial performance.

Now before we take a look at our 2023 guidance, I want to take a minute to revisit our financial framework on the next slide. First off, our revenue profile on the left. At the beginning of 2020, DARZALEX was our only product on the market. Today, we have 6, and that will generate continued recurring revenue growth in 2023. And we see a clear path to potentially expand the number of approved products with the recent submissions for epco and Janssen submissions for talquetamab. Taken together, we expect significant cash inflows in the years to come. Moving to the right, we remain focused in our investments as we evolve our organization for continued success. At the top of the list is accelerating and expanding epco, but that's just one of the exciting opportunities that provide us with a compelling rationale for increasing investment. As we've told you before, if someone sees these meaningful opportunities, we've got to invest. And that's exactly what we're doing.

So with that background, let's take a look at the components of our strong recurring revenue on Slide 14. For 2023, we anticipate another year of strong underlying revenue growth. Before I get into the detail, note that these projections are based on an assumed U.S. dollar/Danish kroner exchange rate of DKK 6.8. At the risk of stating the obvious, I thought it important to highlight that as best we can tell, Genmab collected consensus has been derived using DKK 7.2. And as a reminder, the average dollar/kroner rate in 2022 was DKK 7.1.

Now looking at our total revenue, we're expecting to be in the range DKK 14.6 billion of DKK 16.1 billion, and more than 85% of this will come from recurring revenue, which is up meaningfully from last year. We anticipate that DARZALEX sales will continue to ramp up and be in the range of $9.4 billion to $10 billion. So we're projecting DARZALEX royalties to be between DKK 10.4 million to DKK 11.1 billion. Recurring revenues also include a 32% increase in royalties from TEPEZZA and Kesimpta. But we also expect significant FX headwinds. So overall, we anticipate recurring revenues will increase by around 12%. Turning now to non-recurring revenue. We expect this to be DKK 2.1 billion at the midpoint in 2023 compared to DKK 2.7 billion last year. As you'll recall, there were multiple regulatory filings in 2022, and we benefited by the onetime milestones associated with these.

Let's now take a look at our recurring revenue in just a bit more detail on the next page. As I said, we are anticipating recurring revenue growth of around 12%. And it's important to note, that's on a reported basis. What we're really focused on is delivering the 25% operational growth, but this 25% growth is partially offset by the 13% negative FX impact. We're assuming lower dollar to kroner rate compared to 2022, and as I said earlier, it's a tough comp due to the DARZALEX contractual hedge rate from last year. Now I think it's important to step back and really look through this FX noise and focus on the fundamentals of our very, very strong revenue growth.

Now with that, having looked at revenue, let's look at our planned 2023 investment on the next slide. We expect total OpEx to be between DKK 9.8 billion and DKK 10.6 billion, and this fully reflects the evolution of our pipeline and, indeed, our entire business. We have 3 near-term investment priorities: first, initiating new Phase II and Phase III epco trials to really maximize its potential; second is generating the next wave of data for DuoBody-PD-L1x4-1BB and DuoBody-CD40x4-1BB; and of course, third, the potential launch of epco. These are our immediate priorities. But as I noted, we're not just focused on today. In line with our vision, we're also very focused on long-term value creation. So we're continuing to build out our structure teams and systems. We're investing to maximize the value of our current technologies, and we're also investing to generate the next wave of IND candidates and to progress our early stage pipeline.

With that, let's break out our 2023 investment profile with a few numbers on the next slide. Here, we've laid out the incremental investments we're expecting to make for our top priorities in 2023. Starting at the top, a successful launch for epco will require a significant amount of our focus and investment, especially on building out our 2 key markets: the U.S. and Japan. And as a reminder, while the initial indication for epco is rather modest, over the medium-term, we think this can be a meaningful opportunity.

In particular, in the U.S. and Japan, where we are the commercial lead and booking net sales, the market is highly competitive. So for a successful launch, we need to focus investment in this area. But of course, it won't be our only focus. You can see the biggest overall increase in investment will be in advancing our portfolio. This is an investment for now and for the future as we look to expand development of our mid- to late-stage programs as well as the growth of our overall portfolio. As Jan mentioned, when talking about our 2030 vision, we'll also be making investments to move into a new therapeutic area, which is part of scaling up our already world-class discovery engine.

Now having looked at the framework and the constituent parts, let's look at how this all comes together on Slide 18. Here, you can see our 2023 guidance. We expect our revenue to be in the range of DKK 14.6 million to DKK 16.1 billion, and most of this is made up of recurring revenue where we're expecting 25% of operational growth. For OpEx, we expect to be in a range of DKK 9.8 billion to DKK 10.6 billion. As I previously highlighted, this step-up in investment is fully in line with our strategy and our focus on creating long-term value. Putting all this together, we're planning for substantial operating profit in a range of DKK 3.9 billion to DKK 6.2 billion.

Now for my final slide, let me provide a few closing remarks. In summary, we have an exceptional 2022. We created growing recurring revenue streams, and that gives us a strong backbone of significant underlying profitability. And we're investing those revenues in a highly focused way to realize our vision and to capitalize on the very significant growth opportunities in front of us. And on that note, I'm going to hand you back over to Jan.

Thanks, Anthony. Let's move to Slide 20. As Anthony said, 2022 was an exceptional year for Genmab as we made significant progress across all areas of our business. In 2023, we will continue to work towards our 2030 vision with our KYSO antibody medicines, where our KYSO antibody medicines are fundamentally transforming the lives of people with cancer and other serious diseases. We will start with bringing our own medicines to patients. Subject to approval, we are enthusiastic about the potential launch of epcoritamab. We are also looking forward to working with AbbVie to expand development with new studies. We will collaborate with our partner, Seagen, to establish TIVDAK as a clear choice for patients with metastatic cervical cancer, and together, we will continue to broaden the tisotumab vedotin clinical development program.

Turning to our world-class differentiated product pipeline. We very much look forward to data from the clinical expansion cohorts and progress to the next steps for both DuoBody molecules in developments with BioNTech targeting 4-1BB. We anticipate expanding and advancing other early-stage programs, including the potential for multiple additional INDs or CTAs during this year. Fundamental to the success of these programs is having the right team and culture in place. We intend to continue to scale our organization based on our planned portfolio development and business needs. Finally, we intend to leverage our solid financial base to support our growth, which could include external opportunities. With all of this in mind, we are very excited about the next 12 months.

So let's now move to my final slide. That ends our presentation of Genmab's financial results for 2022. Operator, please open the call for questions.

(Operator Instructions) We will now go to our first question. And your first question comes from the line of Matthew Harrison from Morgan Stanley.

Great. I guess 2 for me. Jan, I'm curious, you talked about external opportunities that you may be looking at. Could you just give us a little bit of more detail around what you may be thinking size, scope and whether these are technology-focused or product-focused.

And then second, just on the -- as we think about epco launch in the second half of the year, I'm not asking for guidance here. But just maybe how should we think about some of the parameters? We've obviously seen multiple late line DLBCL launches from a variety of drugs. How -- should we look at those as the right kind of comps to think about for epco? Or are there other factors that you would highlight for us?

Thanks, Matthew, for the questions. And I will definitely hand over the second question to Anthony Mancini. But let me start first with the external opportunities, Matthew. We are very much looking at the external landscape, both for components which we can use actually to build differentiated antibody therapeutics as we have done before. Of course, last year, we did a number of deals with different companies like OBT, OREGA, Scancell to get antibody components make to really use in our next-generation antibody therapeutic formats. But we're also looking at other technologies, new types of ADCs, new type of immune stimulators. And as we already revealed last year, we are going to add at least one significant disease area to our focus area in cancer, and we potentially could do a strategic collaboration with another party already having a presence in another disease area, Matthew.

So I think it can be one of these or several of these potential options, and I think it's the right thing to do to use our financial resources to broaden our capabilities and suite of technologies actually in the coming time. I want to leave it with that, Matthew, and then hand over to Anthony Mancini to ask -- to give a bit more perspective on the epco launch and how to think about that. Anthony?

Yes. Thanks, Jan, and thanks, Matthew, for the question. So just to situate you in terms of how we're thinking about the launch landscape, there continues to be, despite approved options in the space, really a high unmet need, in part, due to the aggressive nature of LBCL based on what we're hearing from prescribers. So CAR-Ts are clearly a compelling innovation, yet many patients are still unable to get the treatment due to various challenges impacting their availability. Some of the other novel agents that are approved in the space are accessible yet fall short on some other areas, particularly in efficacy. So despite the fact that it's a modest opportunity, as Anthony described earlier, with about 3,800 new U.S. patient starts in the third line setting, we still think the unmet need continues to be high, and we continue to hear from prescribers in both the academic and community setting that if they could choose a single agent that offers an optimal profile that balances powerful efficacy, manageable safety and a seamless patient experience with subcutaneous administration, that it is indeed differentiating. So of course, this first indication is a starting point that we'll build from and hopefully help enable EPCORE to become a core therapy across LBCL, FL and beyond. Thanks for the question.

And your next question comes from the line of Peter Verdult from Citi.

I'm Peter Verdult from Citi. Just a couple of questions. Maybe just to try the language on the BioNTech collaboration. I think you've gone from wanting to have at least 1 of those antibodies into Phase III this year to just 1042. I just want to make sure I understand what's changed or anything there. And just the latest thought tie when you're -- just being your sensible guess as to when we might see HexaBody [data] to actually come in. Is next year still likely? Or should we be pushing our expectation? And then secondly, just Jan, I'm expecting the response to be quite short. Have you got any sort of insight or clarity as to when we might get a resolution of the ongoing arbitration on [Fast Track]?

Thanks, Peter, for the questions. I will have Tahi think about the BioNTech [4-1BB] programs and the HexaBody-CD38 data timing and can be brief, Peter, on my answer to the J&J arbitration case. I think it's a full swing. And we hope that we get a resolution sooner rather than later, but the timing is completely down to the panel, to the arbitrator. So I cannot give you any color, Peter, on the timing of the potential outcome of the arbitration. What I can say is that the process is in full swing, and I think all the paperwork and all the documents are in place, and we hope for a resolution and of course, for a positive outcome sooner rather than later. Having said that, I'm handing over to Tahi to see whether he can give a bit more color, Tahi, on the [204B] targeted bispecific progress with BioNTech and potential timing of data et cetera. Tahi?

Will try my best. Yes, I would say, no, nothing has changed. I say. So both of these programs 1046, 1042, the [204] bispecifics that we are developing -- co-developing with BioNTech are on track on generating the data. And as we have communicated before, we expect to have that data in our hands in the second half of the year, and then we'll make the appropriate decision. So nothing has changed in that end. And there's nothing that at this point would indicate any changes to what we've communicated before. And the CD38, I think we've also been very clear that really the time points to look at data that will both inform us and then potentially there on Janssen and that decision is '24

We will now go to our next question. And your next question comes from the line of Sachin Jain from Bank of America.

I'm Sachin Jain here, Bank of America. A couple of questions, please. Just firstly on DARZALEX. Do you mind giving a bit of color as to what percentage of sales you see in second line and how you're thinking about risk from the J&J CAR-T data, which was recently headlined. (inaudible) one of Anthony's comments on CAR-T existing penetration. But just really you could flesh out your thoughts there. And then 2 clarification questions to the prior question, please on 1042, 1246, is it fair to therefore, think if -- Tahi, you're talking about data in half -- second half but really for a conference presentation, we're looking well into the year, towards the end of the year, is that fair? And then for the CD38, if you could just provide a bit of color as to why you have just added the subcu arm? Was that your decision or J&J? And does that delay the decision point for J&J? I know you said '24, but I think the prior working assumption was sort of early '24 for decision, but is that pushing that decision into mid low end of '24?

Thanks, Sachin, for the questions. I'm going to hand over the first question on the second-line sales, which looks very encouraging. I can assure you on the latest brand impact data to Anthony Mancini, and then Tahi can handle the other 2 questions on the timing of data dissemination for 1042, 1046 as well as the timing for HexaBody-CD38 later. Maybe Anthony Mancini, you can start giving a bit more color on second line use of DARZALEX as it stands and potential competition from CAR-T, how we see that.

Thanks, Jan, and thanks, Sachin, for the question. As it relates to the second line, I mean what -- I really think there's a question for J&J to be best positioned to answer the composition of their total business with DARZALEX. What I can comment on from a share perspective is that the second line portion of the business continues to perform very well. It's a 50% share for DARZALEX, and we continue to see continued growth there with new patients exceeding total patients in the second-line setting. And CAR-Ts still do -- will have a place. Clearly, despite the limitations that they have, there are still patients that move very quickly between lines in the multiple myeloma setting. So we do think that CAR-Ts will play a role. That said, the primary growth factor for DARZALEX really continues to be driven by frontline, and we continue to see very strong growth in that space and lots of growth potential to continue driven by frontline and share gains, both in the U.S. and ex U.S. as reimbursement continues. So I'll leave it there and pass it back to you, Jan.

Thanks, Anthony. Maybe over to Tahi on -- to give a bit more color on potential data dissemination for the 4-1BB targeted bispecific program, Tahi, and some color on HexaBody-CD38 timing of data, head-to-head data.

I'll take the CD38 first. Jan mentioned at the beginning of the call that there's been some updated clinical trials I've got. So we have been progressing the steps that we need in order to generate the data head-to-head to DARZALEX subcu. And we are moving on to that, we'll generate the data and we have been, I think consistent with that. I think '24 is a time point where we probably will have the data in our hands to make a reasonable decision. And that will be true for us and Janssen and then also, as you communicate to the outset. As it relates to -- yes, you're absolutely correct. The conferences in the solid tumor space in the second half are spread more towards the end of the year as to the data release for these conferences is probably a little bit earlier. And so in the end, it is a function of generating the data and getting it out. So I have no more to add to that.

We will now go to the next question. And your next question comes from the line of Jonathan Chang from SVB Securities.

First question, on the 2023 revenue guidance, can you discuss what you see as the key factors that determine where you might land in that range. given the lower end suggests little change versus 2022? Are there other key drivers beyond dara and FX that we should be considering? And second question, as you prepare for the potential epco launch, what do you see as a key determinant for whether or not epco can become the market leader in the CD20xCD3 class in the initial relapsed/refractory DLBCL setting and beyond?

Thanks, Jonathan. Excellent questions. The first one, I will delegate to Anthony Pagano and then the epco launch question will go to Anthony Mancini. Maybe Anthony Pagano can start.

Sure. Thanks, Jonathan. I appreciate getting a question on the earnings call today, so that's great to let me join the fun. Overall, as you kind of highlighted, revenue range is DKK 14.6 billion to DKK 16.1 billion, and the headline numbers you kind of rightly point out, on a reported basis, this is just a 12% increase. But as I highlighted, with the significant FX headwind. So on an operational basis, this is like we're really focused on the execution here, is 25% growth. So significant growth. You already highlighted some of the big swing factors, most notably DARZALEX. There we are guiding very significant growth range of $9.4 billion to $10 billion. Maybe one thing that I didn't cover beyond that on -- in my prepared remarks is really then on the milestones. So here, there is a little bit of, let's call it, variance between the lower end and the upper end.

And here, I'll just drill into this a bit for you. So in terms of the milestones for 2023 [debris], we have a total range of DKK 1 billion to DKK 1.4 billion and approximately 70% of this is related to epco. Now for epco on the lower end of this -- the lower end of the guide for epco, we have 3 milestones: So one associated with the U.S. approval; second one is associated with the EU approval; and then third, we have a filing for a new indication in one territory. So that's for the lower end of the guidance for epco.

And then secondly, on the upper end of the guidance for epco, there's an additional milestone above and beyond what I just said, and that additional milestone would be filing for a new indication a second territory. I think, Jonathan, if we kind of step back, the fundamentals of our overall growth story, 6 products compared to 1 a couple of years ago, clear path to potentially adding number 7 to number 8 during the course of 2023 and overall very strong 25% operational growth looking forward to in the course of this upcoming year. Anthony, I think you want to take the second question?

Yes. Thanks, Anthony, and thanks, Jonathan, for the question. It's a great question. It's going to be, I think, a competitively intense marketplace, but we like where we stand. And certainly, we're pleased with the readiness progress we've been having across functions with our partner, AbbVie. Our field teams are ready across medical sales and market access. They're in place and fully trained. Our patient services team is ready to go, and we've already started active discussions with payers through pre-approval information exchange and the reactions have been positive. .

What I'd say in terms of what's key is that we want to ensure very quickly that health care providers, whether they're sitting in the community or the academic setting, have a very clear understanding of how to safely and effectively administer EPCORE. We think that doing that quickly across sites of care is a key factor so that we can really start to establish epcoritamab as the optimal treatment choice in the third line plus setting. And we think if we can start our lead there, that we can build our lead. So the key will be to seamlessly coordinate across channels and across (inaudible) so that we ensure an optimal end-to-end customer experience. I'll leave it at that, Jonathan, and look forward to the continued progress.

And your next question comes from the line of Elizabeth Walton from Credit Suisse.

Just a couple left from me. You noted in your 2023 priorities the sBLA submission for epco this year. Perhaps you can update us on when we could expect to see the potential pivotal data in relapsed/refractory follicular lymphoma and if we should think of a possible submission in the second half of the year? And then just to touch back on the CD38 HexaBody, are you able to confirm whether the J&J opt-in option for this asset does not expire within 2023?

Thanks, Elizabeth, for the questions. I can tell you that the option for CD38 HexaBody does not expire, I can tell you this year. So we need to collect the data, and then there is a only a few month option period after we submit the clinical data that J&J can opt in or out on HexaBody-CD38. So it's still intact. And the first question on the data in relapsed/refractory diffuse large B-cell lymphoma and also follicular lymphoma, I will ask Judith to give you a bit more color on timing. Judith?

Yes. Thank you for the question. So the question was specifically for the pivotal follicular lymphoma, and we expect to have this data by the second half of this year.

And your next question comes from the line of Michael Schmidt from Guggenheim.

This is Paul on for Michael. I had one actually on the earlier pipeline on the B7H4 bispecific. Just wondering how are you currently approaching patient recruitment for that Phase I study? Is there any weighting towards 1 of the 4 select tumor types? And do you envision that sort of biomarker selection strategy down the line? And then maybe a quick follow-on. How should we think about the differences between the CD3 bispecific approach versus some of the ADCs for B7H4?

Thanks, Paul. I will hand over the question to Tahi, and then the perhaps Judith can also chip in I think after Tahi has already given his initial thoughts on the B7H4 bispecific program, which we are very excited about. And Tahi, maybe you can give a bit of insight into tumor strategy, biomarker strategy and then maybe you or Judith can give some further perspective on CD3 T cell engagers versus ADC approaches for B7H4? Tahi?

Sure. First part, the question of indications. So yes, B7H4 there are some indications where B7H4 is quite consistently and analogously expressed. And these are the ones that we are currently concentrating in the study and this is ClinicalTrials.gov. And then other indications for B7H4 is expressed but not necessarily always consistently at a high level. And these are indications where potentially a biomarker strategy would be relevant. So right now, we're focusing on enrolling patients in the first human trial that based on internal and external data have diseases that are known to have B7H4 expression consistently. And I think the operative (inaudible) is consistently here.

And then in a future development plan, we will probably also look at indications where we might have to select based on B7H4 expression because it's not necessarily consistently expressed. So that would be the reason (inaudible) strategy not to give too much away on that. And then on the question of ADC versus CD38, I think fundamentally, these are completely different mechanism of actions that have different opportunities and challenges. So that's at least my point of view. I hope (inaudible) answer the question (inaudible) specific detail that you would like to know, but sort of sharing that B7H4 has to be in the tumor, they are very, very different, both in the expression that they need and the mechanism and the potential as far as the safety (inaudible).

Thanks, Tahi. I don't know whether Judith wants to add anything. Otherwise, we will give it back to you, Paul. Judith? Do you want to add anything here?

So nothing to add. I think that as I alluded it depend on the expression of the target, modernity of the target and the expression of the target in the tumor vis-a-vis is normal cell. And this is why we show (inaudible) bispecific.

And your next question comes from the line of Yaron Werber from Cowen.

Great. I also have a question on 3014 specifically in AML. And can you give us a little sense of what's the plan there? Is there a chance to test it also in that setting just given that DARZALEX obviously couldn't show activity there historically? And then secondly, is the thought just as you think down the line to go to DARZALEX refractory setting in myeloma? Or is there a chance to really move up? And how do you do that? Is that pivot -- MRD negativity as an endpoint.

Thanks for the questions. I think Tahi can handle this. Tahi, HexaBody CD38.

Sure. First question first. So I mean, let's actually start beginning with the (inaudible). The hypothesis around the HexaBody-CD38 program is that exonization leads to a lower threshold needed for the expression of CD38 (inaudible), and thus would increase the efficacy both in multiple myeloma but also open up spaces where daratumumab was unable to elicit [synase] response because the density of CD38 is not that high end that would be, for example, the (inaudible) or, as you mentioned, AML.

So that's how you can think about how we are approaching this. And then to the second question around where to position, future position will be a discussion of who is -- future in charge of developing the drug. But having said that, the proof of principle is generated in patients who are dara-naive in a direct comparison between daratumumab in the Hexa CD38 because this is the best way of proving and documenting also that exonization does indeed need to prove efficacy signal and the unchanged safety profile because daratumumab, of course, has a very favorable safety profile. And that's probably the place where this drug in the mechanism makes more sense.

And your next question comes from the line of Emily Field from Barclays.

I'll just ask 2. The first one is just on the Part B expansion of the HexaBody-CD38 [CASTOR] head-to-head trial. Relapsed/refractory CD38-naive patients is what you're looking for. All the trials has appeared to be in the U.S. and Western Europe. Are finding those relapsed/refractory DARZALEX-naive patient going to be a challenge in those regions? Or are you going to have to add more sites to that trial given how successful DARZALEX has been? And then maybe just kind of a higher-level question on you've indicated the desire to maybe move into a therapeutic area. Is that something where we would get any insights into what that would be in 2023? Is that something that would be wholly organically developed a Genmab or supplement it with business development? Just any early color you could give there would be helpful.

Thanks, Emily, for the questions. I will take the second one for sure. And the first one, I can hand over probably to Tahi. So for the new therapeutic disease area, that will be a combination of what we do internally at Genmab. We already have programs in a new disease area actives. We'll probably start speaking about that, Emily, at the time that the molecules are ready to be moving into the clinic, like we do now also for the cancer programs. But it will likely be supplemented by strategic deal or strategic deals and potential BD deals also to basically accelerate the move into the new disease area. We are thinking of adding one very large disease area which can encompass different diseases. So this year, you will definitely hear more about that but probably in the context of strategic interactions with another party, Emily. I want to leave it to that for now and then ask Tahi to basically talk a bit more about where can we find the patients for the head-to-head cohorts in the HexaBody CD38 trial. Tahi?

Sure. yes. So absolutely correct. Direct consequence after the (inaudible) improvement that daratumumab had on the life of patients with multiple myeloma is, indeed, that those patients who have relapsed/refractory multiple myeloma and not yet exposed to daratumumab are getting less and less. Having said that, we do have probably the best insight partially because on this entry, we collaborate with our partner, Janssen, on where there are still regions in the world where because of health care access issues or other issues that more penetration in the relapsed setting is maybe not as high. And then obviously, are going to focus our core in the trial in these regions. So...

Thanks, Tahi. And Emily, we are not worried about recruitment there. That's, I think, safe to say. I think there are some areas where we can indeed to recruit such patients. And we now know with the active doses of HexaBody-CD38, so we're very enthusiastic about progressing that head-to-head, and hopefully have the data by first half of next year or earlier.

And the next question comes from the line of Asthika Goonewardene from Truist.

Just want to get back to HexaBody-CD38. On ClinicalTrials.gov, you've increased the recruitment -- target recruitment adding to over 270 patients. So that's an increase of about 120. But beyond the 2 head-to-head -- on the head-to-head component, there are, as you know, the expansion cohorts in other indications. So can you break out how many patients you aim to recruit specifically for the head-to-head arms as well as the expansion cohorts? And then just on epco, just want to get your thoughts on which combinations of epco and other agents in earlier lines of LBCL do you see panning out next?

Thanks, Asthika, for the questions. And I think I will hand over both to Tahi. I don't know, Tahi, whether you want to give full transparency on how big the cohorts are. I'll leave that up to you. And definitely, you can speculate on the potential combinations in LBCL, of course, in the early-stage disease. Tahi?

Yes. So we have not -- and probably should not completely disclose, but there is a contractual size to the head-to-head comparison that we are meeting. That's partially part of the update, not only. So there's the different cohorts the head-to-head comparison a little bit refractory cohort and [AML] cohort (inaudible). Some of it is that we update in the ClinicalTrails.gov, but I wouldn't go into the details of [specialty]. On the early combinations, there's a lot of work, obviously, done also in collaboration with a partner, AbbVie, both in the relapse and then in the front line. I think the one frontline study that is going to come up is the one in elderly patients who are not necessary candidates for (inaudible), which we are using as an opportunity to explore novel combinations with (inaudible).

And your next question comes from the line of Etzer Darout from BMO. .

Just one more on HexaBody-CD38, if you're not completely exhausted yet on that. So just on the head-to-head study with daratumumab just wondering if you can help us think about sort of kind of efficacy safety benchmarks. I guess, ultimately, what level of activity would you want to see to move that program forward?

Thanks, Etzer, for the question. And indeed, HexaBody-CD38 is apparently the winner today for all the questions. So that makes Tahi also the winner because he's doing a lot of that -- for that program. Tahi, you're on, again.

Okay. Talking about benchmarks. So the only benchmark that we can refer to at this point is the data set of the -- what was data on (inaudible) study or 501. They are slightly different. So it ends up being [daratumumab] having a response rate of roughly 30%, a little bit less. So if you take that, then there's one benchmark. The other one to look at is, of course, depth of response. And then there is another part of the equation that is the uncertainty in that data that was generated in the time frame 2012, 2013, may not necessarily reflect the efficacy of daratumumab in a cooperation that may be completely different because standard of cares have changed. The combination of units and (inaudible) inhibitors in combination frontline has moved forward. Other mechanisms have been introduced to relapsed setting. So maybe patients are sensitive and naive to daratumumab. But half already been exposed to some of the drugs that have been in the BCMA class, for example. And that's why I think the head-to-head comparison is the best way to really get to the heart of whether hexamerization leads to enhance C1Q mining to enhance CDC and, through that, to enhance efficacy either by increasing the overall response rate and/or by increasing the depth of response. And I think these are both parameters to look at.

We will now take our last question for today. And the last question for today comes from the line of Matthew Phipps from William Blair.

I was wondering on GEN1042. You mentioned moving into late-stage development. Is it safe for us to assume that head and neck in combo with chemo and pembro like you showed at ESMO IO? Or is it too early to jump to that conclusion. And then for the hematologic T cell engagers, we've now seen 2 quite different labels from the FDA regarding hospitalization suggestions or requirements during dose escalation between (inaudible) and TECVAYLI. Just wondering if you guys have any thoughts on where epco might land for the hospitalization and BCL.

Thanks, Matthew, for the questions. And I think the first one, we can be quick on the 1042, I think it's too early to conclude how to position it because we're actually doing frontline combination therapy in 4 different cancers, Matthew. You've seen some very encouraging early head and neck cancer data which we're also very excited about. But I think it's too early to make a call there, but we will come to that conclusion on next steps this year. So a very exciting year for 1042. I'll leave it at that. And then I basically want to ask Judith to give a bit more color on hospitalization for T cell engagers because all on the different labels, as you already alluded to, Matthew. We are aware of that, for sure. Maybe Judith you can give a bit of color there. .

Yes. So thank you for the question. And there are different examples. We are very aware that the safety profile of epco is well managed with the current guidances in the protocols. We requested a single day hospitalization after full dose. And as you know, only 60% of patients presented CRS and most of it grade 1. So this is the data that we are sharing with authorities. And based on that, we might have different recommendations. It's very early to speculate which one, but we feel very comfortable with the way it is managed and the safety profile of epcoritamab.

Thanks very much, Judith. I think that's it, Matt, for now. And then I will give some closing remarks. So thank you all for calling in today to discuss Genmab's financial results for 2022. If you have additional questions, please reach out to our Investor Relations team. We hope that you all stay safe, keep optimistic and remain healthy, and we very much look forward to speaking with you again soon.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.